US economy shrugs off impact of hurricanes

The US economy shrugged off the damaging impact of hurricanes as it posted better than expected growth in the third quarter.

Gross domestic product (GDP) grew at an annualised rate of 3% in the July-September period, the Commerce Department said, despite the storms wreaking an estimated $130bn (£99bn) of damage to property.

It was a slight slowdown from the 3.1% pace of growth seen in the second quarter but well ahead of the 2.5% figure forecast by economists.
The figures showed an increase in firms building up stockpiles of goods and raw materials, and a smaller trade deficit, offsetting a hurricane-related slowdown in consumer spending and a decline in construction.
Hurricanes Harvey and Irma struck parts of Texas and Florida in August and September though a third storm, Maria, that hit Puerto Rico and the Virgin Islands, had no impact on growth as the territories are not included in US national accounts.

Image: Texas also saw major disruption
The Government said it was impossible to estimate the overall impact of Harvey and Irma on GDP.
But it did estimate damage to private property of $121bn and to public assets of $10bn.

Earlier this month, US employment figures showed the first monthly fall in jobs for seven years, due to the impact of Harvey and Irma.
The dollar rose to a three-month high against a basket of currencies as the growth figures underlined expectations that the US Federal Reserve would hike interest rates for the third time this year in December.
James Smith, economist at ING Bank, said the US economy was “continuing to motor along at a fair pace”.
But he said there were still doubts about the path of interest rates as inflation remained weak and amid uncertainties over the next chair of the Fed and a possible confrontation on Capitol Hill over the national budget.
The figures came as oil giant ExxonMobil estimated that Harvey, which tore through the Gulf region, put a $160m dent in its earnings, though it was still able to report a 50% rise in third quarter profits to $4bn.